Kenya PMI August 2016

Kenya: PMI continues to recover in August

September 5, 2016

The composite Purchasing Managers’ Index (PMI), which is produced by IHS Markit and CfC Stanbic Bank, increased for a second consecutive month in August, after hitting the lowest level on record in June. In August, the PMI edged up from July’s 53.3 to 53.5, thus remaining above the 50-threshold, which points to expansion in business activity. The index has been in expansionary territory since the survey was launched in January 2014.

August’s modest improvement mainly reflected robust output growth, increasing input stocks on the back of strengthening demand as well as rising new orders, including new export orders. The pace of job creation also sped up slightly. According to the survey report, “new orders from abroad supported business as exports rose at the fastest pace since May. Subdued costs for the remainder of the year should assist firms in boosting production and subsequently support output; however this benign outlook on costs could alter if the currency faces volatility via portfolio outflows following the recent amendment to the banking bill. Nonetheless, high profile conferences like the recently concluded TICAD are evidently underpinning an impressive recovery in the tourism sector.”

This rise in the latest composite Purchasing Managers’ Index (PMI) reading, produced by IHS Markit and Stanbic Bank, reflects the return of Kenya’s private sector to expansionary territory in the final leg of 2017 after contracting for eight consecutive months as the political scene, marred by months of protracted uncertainties, begins to stabilize.